Charles Barkley testifies in Donald Watkins trial

Updated Feb 28, 2019; Posted Feb 28, 2019

Richard Shotwell/Invision/AP

In this June 25, 2018, file photo Charles Barkley arrives for the NBA Awards at the Barker Hangar in Santa Monica, Calif. Barkley was honored in Philadelphia when he received the Lew Klein Excellence in the Media Award at Temple University on Friday, Oct. 5, 2018. (Photo by Richard Shotwell/Invision/AP, File)

Basketball star and sports television personality Charles Barkley was the first to testify Thursday in the federal fraud trial for Donald Watkins and his son.

Donald Watkins Sr. and Donald Watkins Jr. are both charged with seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud relating to a conspiracy the government claims lasted for nearly a decade. They were indicted in November. Their joint trial began last Tuesday, and both men are representing themselves.

“Donald was a friend of mine. I trusted him. I had no reason not to trust him," Barkley said.

During the trial’s first week, former U.S. Secretary of State Condoleeza Rice and Martin Luther King III testified. Two former NFL players also took the stand, along with two more this week. Former Birmingham mayor Richard Arrington Jr. also testified last week and talked about four loans he obtained to give the funds to the Watkins men. Arrington was given immunity in exchange for his truthful testimony.

The former NBA star and Leeds native testified about his investments and loans to Watkins Sr. and his companies. According to testimony and documents presented in court, Barkley lost $6.15 million to Watkins from 2007 to 2014 and has never been paid back.

Barkley, who attended Auburn University for three years before being drafted to the NBA, played professional basketball for 16 years. He currently works for Turner Sports and travels between Atlanta and Arizona.

Barkley met Watkins Sr. while he was visiting his mother in Birmingham, the basketball star said. The two developed a friendship and Barkley suggested they work together for nonprofit activities in the city’s black community.

Several years after their friendship began, Barkley said Watkins Sr. told him about Masada and other business ventures. “I thought he owned Masada,” Barkley said. “I thought he owned all of it to be honest with you…I remember there was a lady, I thought they owned it together.”

Masada was originally started by two men, Daryl Harms and Terry Johnson. In the early 2000s, Harms died and his 50 percent of the company went to his family. Watkins Sr. took over management of the Harms share, but never purchased any percentage. Johnson testified that he also offered his half of the company to Watkins Sr., but the elder Watkins never purchased any percentage of that share.

After several years of friendship, Barkley first invested in Watkins Sr’s businesses. Barkley said Watkins Sr. mentioned the prospect of Waste Management buying Masada, and that idea attracted Barkley to invest.

In seven years, Barkley invested and loaned a total of $6.15 million in Watkins Sr. and his business entities. “Donald was a friend of mine. I trusted him. I had no reason not to trust him,” Barkley said. He didn’t get his longtime financial adviser Glenn Guthrie to look over the investments or advise him, Barkley said, because he trusted Watkins Sr. “This was a deal I brought to [Guthrie],” he said.

“I take full responsibility for [Guthrie] not being involved… I take full responsibly for this thing. I lent the money to Donald plain and simple… that’s my fault.”

Barkley said in his investments and loans, he believed his money was going to Masada or Masada-entities’ business expenses. Barkley said he never intended his money to go to Watkins Sr. or Watkins Jr.’s personal expenses. He said he based his investments on “one hundred percent trust in Donald Watkins [Sr.]”

He testified that he has never been repaid for his loans or seen a return on his investments. One email in May 2011 from Watkins Sr. to Barkley talked about getting a loan renewal and adding a $100,000 “friendship kicker” because of the convenience of not having to go to a bank. In that same email, Watkins Sr. asked Barkley for tickets to a playoff game in Miami.

Barkley said he “would have liked to known” Watkins Sr. was having problems paying his credit card bills and owed back taxes. “I thought the money went to a company,” he said.

Financial records and bank statements presented in court showed Watkins Sr. paid personal loans, bills, and other payments with the funds he received from Barkley.

An email in April 2012 with the subject “Idea for money” from Watkins Jr. to Watkins Sr. showed the younger Watkins asking his father to go back to Barkley for another million dollars. Some of the priorities Watkins Jr. said needed to be paid with that money were listed as taxes, rent, American Express bills, past due bills, loans, and alimony.

Two days later, Watkins Sr. emailed Barkley and asked for more money.

In a clip from a 2017 deposition from Watkins Jr., the younger Watkins said Barkley previously told the Watkinses that if they needed anything, they should let Barkley know. In his testimony, Barkley said that statement wasn’t true. “Me and junior never discussed business, ever,” he said.

In a September 2012 email to Guthrie and Barkley from Watkins Sr. said Watkins Sr. was “highly confident that Charles and the other investors… will receive a cash return on their investments on or before December 31, 2012.” Barkley said he did not receive that return.

An attachment to an email from Watkins Sr. to Watkins Jr. around the same time called “Payment list from Barkley’s funds and Arcadis late fees” showed payments to Watkins Sr.’s girlfriend, alimony, credit card bills, car payments, mortgage payments, legal fees, and other expenses.

In May 2013, Watkins Sr. asked in a “special request” to Barkley for a short-term $150,000 loan. Barkley said that’s when he “started to get suspicious” about the business. “I made decision, a stupid decision,” Barkley said, to send the money. Barkley said he thought, “I’m already in so much, I’ve got to ride it out now. And that was my decision, my mistake.”

He said, “That was like the last straw for me.”

In an email from Watkins Sr. to Watkins Jr. days after he asked Barkley for a loan, the elder Watkins asked Watkins Jr. to pay several bills “if Charles comes through.” Of those bills were Watkins Jr.’s American Express bill for $79,000 and his bill for $10,000. “We will climb out of this financial hole, but it takes a lot of focus and help,” the elder Watkins wrote.

Barkley approved the loan, and had Guthrie wire the money. Barkley said he was not concerned about Watkins Sr. and didn’t discuss the situation with Guthrie. “That was a mistake on my part obviously, but I wasn’t worried. I felt confident with you,” he said.

Documents show charges on Watkins Jr.’s American Express bill from the time, including charges from Direct TV, Hermes of Paris, Lamar Media charges for Watkins Jr.’s State Farm billboards, Gold’s Gym, several fast food restaurants, a security service, 1-800 Flowers, iTunes, GoDaddy, and payments for a mattress. “I’m just mad more than anything,” Barkley said after seeing the charges. “I mean, you know, I thought junior ran his dad’s bank. I didn’t know he had a side job. This is all coming as a shock to me to be honest with you.”

When Watkins Sr. again asked for money in February 2014, Barkley said no.

Barkley said he didn’t thoroughly read through each purchase agreement and promissory note, and does not know who the affiliates are mentioned in the Watkins Pencor LLC purchase agreement. “I’m complaining about loss of income. I have not received a dime,” Barkley said to Watkins Sr. on cross examination. “My testimony is I’m out 6.15 million and I have not gotten a dime back, and its 2019. That’s my testimony… I’m assuming I’ve lost my money… I’m assuming the money is gone”

Barkley said he didn’t personally bring legal matters against Watkins Sr. because when the FBI and SEC started investigating, Barkley thought he should let them handle the case. “The truth is always going to come out,” he said.

Now, Barkley said he is “disappointed and angry” at Watkins Sr. and Watkins Jr. “because not just me, you made all of us look like idiots and fools.” He said he doesn’t expect to ever recover any of the over $6 million he invested or loaned.

“I’m concerned about some of the evidence I’ve seen,” Barkley said. “There are no winners and losers. This is just a bad situation for a lot of people. Period.”

Payments Barkley Made

The following are the payments Barkley sent to Watkins Sr. and his businesses, the dates of those wires, and the purposes for them.

1) $1 million on Jan. 18, 2007 for a purchase agreement

2) $1 million on March 3, 2008 for a purchase agreement with Watkins Aviation

3) $1 million on May 14, 2010 for a promissory note or loan. That loan was due May 14, 2011, but Guthrie said it was never repaid. There was also a provision for 10 percent interest, but Guthrie said that wasn’t paid either.

4) $1 million on May 18, 2011 for a promissory note. That loan was due May 18, 2012 and also had a provision for 10 percent interest. Guthrie said those funds were never repaid.

5) $2 million on Sept. 14, 2012 for a purchase agreement with Donald V. Watkins PC. That agreement was paid with two different installments.

6) $150,000 on May 28, 2013 for a promissory note to Donald V. Watkins PC. The due date on that loan was June 30 2013 and also had interest set at 10 percent. Guthrie said Barkley Enterprises never received any payments for that loan.